Predicting the Indian Market for 2013: How Will Apple, Google, Facebook, Samsung and Amazon Fare?
Quick recap: In 2012, we saw Android take off like a rocket. India became Facebook’s second-largest market behind the U.S. And while 3G was slow to gain traction, price cuts and new marketing initiatives are giving it new life. These changes have led to major consumer brand marketers to finally start embracing digital and mobile media to grow their businesses.
With major industry influencers like Apple, Google, Facebook, Samsung, Amazon and Microsoft leading the way, it’s likely that India will continue its march forward toward becoming the world’s largest open “mobile-first” society.
Many times, it’s the day-to-day activities that cause the greatest inconvenience in India: long commutes and traffic, long lines to purchase a transportation ticket, lack of trust in the postal system, the dearth of organized retailers, overwhelming choice in local markets, the inability to conveniently access and listen to music on demand — the list goes on. In most cases, consumers didn’t recognize these as problems until entrepreneurial companies came around to solve them. People tolerated inferior experiences because they didn’t know what was possible. Companies like Flipkart, Myntra, Zomato, Olacabs, JustDial, MakeMyTrip and my own company, Saavn, among many others, are real consumer technology companies focused on solving real consumer problems.
2013 will mark the year Indian consumers wake up, finally become attuned to what is possible and start to voice their demands for services that make their day-to-day lives easier and more efficient. And the services that will succeed are those that — in the words of Steve Jobs — “just work.”
Here are the trends I’m seeing that put India on the road to consumer enlightenment in 2013. Note that my predictions for these developments in the coming year focus on the consumer environment and do not predict any government legislation, election results, macro economic changes, scandals or irrational outrages.
- Winner: Android. There’s almost no question that Android’s market share in India will double in 2013. There are now more than 125 Android devices across 17 global and Indian smartphone manufacturers, and these will continue to bring more and more Indians into the smartphone world.
2012 saw the $100 price-point barrier broken; 2013 will see the $50 price point and a whole new set of consumers trashing their feature phones in favor of Android devices. Android was 30 percent of smartphone sales this year, and by the end of 2013 it will touch 60 percent. According to Nielsen Informate Mobile Insights, only nine percent of urban Indians have smartphones. That number will easily rise beyond 12 percent in 2013.
Great apps positively change people’s lives, and more than 50 million people in India will have access to them in 2013.
- Winner: Facebook. India will become the largest consumer market for Facebook. As Facebook has continued to expand, the company has actively worked to get Indians on the Web, many of them for the first time. For many of these people, that first experience will be on mobile, and more specifically, it will be on Facebook. The current 65 million registered user base will double in 2013, putting India on the road to eventually becoming the number one market globally for Facebook. Given the number of holidays and festivals in India (and associated social events), it’s easy to see how Facebook and India are a near-perfect fit. And when it comes to providing an enjoyable experience for Indian users, Facebook is consistently on point.
Facebook’s acquisition of Snaptu in March 2011 translates to a better experience for feature phone users. This is important in a country in which a significant chunk of mobile users still use feature phones.
Indians who do use smartphones can now take advantage of Facebook’s new Messenger service, which launched earlier this month for select international markets, India included. Since it competes with messenger rivals WhatsApp, Kik and GupShup, the move is likely to attract more users in India, as well as solidify loyalty with existing ones. One or more of these rival companies will likely be acquired.
- Winner: 3G Data Consumption. 2012 saw India as the cheapest place to make a voice phone call, but the most expensive country in the world to transfer data. Carriers finally launched 3G in 2011, and through iteration and learning in 2012, they have realized that consumer utility and helping people do what they want to do in their day-to-day lives is the killer app of data. No one wants to be called a “dumb pipe,” and the carriers’ investments in next-generation networks will facilitate a rich ecosystem of free and paid consumer apps that improve people’s lives. Music, sports, navigation, social networking and messaging are examples of great reasons for consumers to opt for a data plan, and the carriers’ marketing campaigns will start to reflect that. While 3G settles in and prices continue to drop, the promise of pan-India 4G is still a year away.
- Early Loser, Potential Future Winner: Amazon. Domestic start-ups will take the e-commerce crown in 2013. Due to such a fragmented retail market, the unrelenting road traffic in urban areas and increasing middle class wealth, consumer e-commerce will continue its rapid ascent. According to TCS, the overall consumer retail sector stands at $500 billion domestically in India; $27 billion of that is modern retail. Apparel ($40 billion) and Consumer Durables and Tech ($35 billion) will be the fastest growing sectors online. Global brands such as Starbucks, Dunkin Donuts, Ecko, London Fog and LVHM will expand in the offline world.
Amazon set the global standard for technology, experience and service in e-commerce. Now many firms in India, like Flipkart and Myntra, have built the infrastructure to deliver a similar experience and are primed to go public as e-commerce sales in 2013 will set a new record. Amazon will make a big move to India, but let’s see if it is organic or through M&A.
- Loser: Third Parties That Push in the Carrier Ecosystem. Over the years, mobile value-added services (VAS) have been marred by “transactionalists” who only care about taking money from the consumer through “instant gratification” and fraud, rather than by providing a compelling value in their offerings. In 2013, consumers will no longer be cheated into signing up for services they don’t want. All players in the consumer VAS world will focus on rolling out products that give the consumer a compelling value, and there will be a real shift toward operating in a “pull” instead of a “push” market. The same implosion happened in Western markets just a few years ago.
- Global Bailout: Nokia or RIM. Both Nokia and Blackberry have been out-innovated and out-maneuvered, mostly by the onslaught of Android-based devices. However, their widespread distribution continues to keep them in the game. Amazon and Microsoft now seem to be convinced by the end-to-end success of software/hardware integration, and an acquisition of at least one of these older players seems very likely in 2013. As a result of these moves, several tier-3 OEMS will be acquired or will go out of business beyond 2013.
- Early DNP (Did Not Play), Potential Future Winner: Apple. Most Apple products like the MacBook Air, iPhone and iPad are available in India. However, the most recent iPhone launches have a six-month lag before they hit the India market and burgeoning demand leads people to request that relatives bring them in from Western countries. Furthermore, the average income of Indians is $1,000 (or the cost of an unlocked iPhone), and while there is still a market of around 50 million people who could afford iPhones and iPads, the devices are unaffordable for the majority of Indians.
Apple is a company with an acute awareness of market opportunities, however, and if it recognizes gold in the Indian market, you can bet it’ll figure out how to retrieve it. The fact is, Apple hasn’t made India a priority yet, and thus gets a DNP.
But it can become a winner. We predict that in 2013, Apple will release older device models in international markets like India, or even begin manufacturing iPhones with the plastic from old MacBooks. Devices like these could run for as low as $100.
- Winner: Samsung Becomes India’s Apple. In Apple’s absence, Samsung’s pace of innovation, great consumer experience and a wide range of devices continue to bolster its leadership in product sales. At 15 percent market share of mobile handset sales, the company’s focus on India puts it very close to unseating Nokia (23 percent market share) at all ends of the spectrum in 2013. Over the next year, Samsung’s share of the smartphone market will increase from 40 percent to above 60 percent. Despite its size, there is a consistent focus on innovation in both products and marketing. Samsung’s nearly 100,000 retail touch points gives it great coverage, and its “Experience Zones” in malls and other high foot-traffic areas allow people to experience the power of its devices.
Samsung’s only possible misstep would be to overextend its reach — for instance, if it started developing its own consumer apps for entertainment, navigation, video, etc., when it would be better to simply partner with the “best of breed.”
- Emerging Winner: Wireless Laptops. Wireless USBs for laptops will continue their mass market push. While there is an appetite for broadband in India, it is used by only slightly more than 10 percent of the 120 million monthly Internet users. Anyone who has been to India can attest to the rather chaotic nature of India’s city layouts, so you can just imagine what the wiring looks like below ground. The next step will be laptops with cellular capabilities built in like we see with the iPad.
Agree? Disagree? I’d love to hear your thoughts in the comment section below.
Vinodh Bhat is the CEO and co-founder of Saavn, the fastest-growing music service for South Asian music worldwide. He is also a Principal and co-founder of 212Media, a privately-held venture development company, which he helped launch in 2005. Follow Vinodh @vbhat on Twitter or check out his playlists on Saavn at http://www.saavn.com/u/vinbhat160.